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May 8, 2013

Is College Worth It?

America continues to produce a quantity of college graduates that exceeds the projected growth in high-skill jobs, research shows

A new bestselling book bears a title, “Is College Worth It?”, that was not generally top of mind a decade ago.

That the question resonates today, however, probably explains why the book, out just a week, is already “temporarily out of stock” on Amazon, likely holding back its sales rank to a mere No. 250 of all books.

What has happened in the past several years to make this provocative question so current?

Well, for one thing, the cost of college tuition has risen by a whopping 42% from 2000 to 2010, according to the book’s authors, William Bennett and David Wilezol.

That questioning the value of a college degree has gained currency likely reflects more than increased costs, but a dawning awareness of decreased benefits in a weak economy.

Bennett’s status as former secretary of education in the Reagan administration adds irony to the college rite of passage whose assumed value made it the path of upward mobility throughout the postwar period. And as a political conservative opposed to what he sees as liberal indoctrination on college campuses, his critique of higher education has a broad focus.

But a narrower look at the economic and financial aspects of the college decision bears relevance, no matter what your politics.

The reasons include increased costs and decreased benefits in a straitened economy.

A policy paper written earlier this year for Ohio University’s Center for College Affordability and Productivity by the economists Richard Vedder, Christopher Denhart and Jonathan Robe noted that 48% of college graduates are working in occupations requiring less than a 4-year degree. In fact, most of those positions required no more than a high school diploma.

Yet many college students emerge from their universities not only with degrees, but with substantial student loan debt that must be repaid, whether they find work in their chosen field or not. And many emerge with the debt but without the degree.

So employment prospects amid a recovery economists view as the weakest since World War II matter to parents and students weighing enrollment decisions before the fall semester.

And according to Vedder, Denhart and Robe’s research, underemployment and overqualification are trends that should persist throughout the decade.

The reason comes down to basic supply and demand: America continues to produce a quantity of college graduates that exceeds the projected growth in high-skill jobs. Specifically, the Ohio University researchers project 31% growth in bachelor’s degrees over the current decade compared with growth of less than half that amount—14%—in the number of jobs requiring such degrees.

“We are essentially creating a glut of overeducated persons who will be forced to perform relatively simple unskilled tasks requiring little in the way of education skills,” they write.

One result of this is an increasingly large number of taxi drivers, firefighters, janitors and retail sales clerks with college degrees. The Ohio University researchers note a related trend toward “credential inflation,” which involves a dumbing down of academic standards and simultaneous pressure on those lacking credentials, meaning that high school graduates are being pushed out of blue-collar jobs in favor of people with college degrees.

The authors jokingly predict that universities will soon be offering a master’s in janitorial studies and that employers will not hire people lacking the credential. But that advanced degree, whether in janitorial or more traditional subjects, is expensive.

And that cost part of the college equation is another key point Bennett and Wilezol stress in their book.

They note that the student loan default ratio has doubled since 2005 and that overall student loan debt now exceeds $1 trillion, overtaking the level of credit card debt last year. Worse, 30% of students with college loans never even graduated.

The New York Times, in an article published last week, offers a more upbeat report on the prospects of college graduates, noting for example that April unemployment for college graduates was 3.9% rather than 7.5% for the labor force as a whole.

But The Times report underscored Bennett and Wilezole and Vedder, Denhart and Robe’s research by noting evidence that college graduates are increasingly found among the lots of car rental agents, waitresses and receptionists.

In previous research, Vedder has noted that the U.S. currently has more than 100,000 janitors with college degrees and 16,000 degree-holding parking lot attendants.